Winding-up petitions require prima facie scrutiny and a hearing before advertisement where the debt is bona fide disputed.

In winding-up proceedings, actual receipt of the statutory demand notice by the company was treated as sufficient despite non-service at the registered office, so that defect did not by itself invalidate the petition. Before directing advertisement of the winding-up petition or appointing a provisional liquidator, the Court must conduct a summary enquiry and give the company an effective opportunity to demonstrate a bona fide dispute, security, counter-claim, or absence of a prima facie case. Where substantial disputes are raised and the petition is being used as a debt-recovery device, coercive steps should not be ordered mechanically. The impugned order was set aside and the matter remitted for fresh consideration after hearing the company.

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Issues: (i) Whether non-service of the statutory notice at the registered office of the company under the winding-up provisions was fatal to the petition. (ii) Whether, before directing advertisement of the winding-up petition and appointing a provisional liquidator, the Court had to afford the company an effective opportunity to show a bona fide dispute and the absence of a prima facie case.

Issue (i): Whether non-service of the statutory notice at the registered office of the company under the winding-up provisions was fatal to the petition.

Analysis: The statutory scheme requires service of demand notice at the registered office before a company can be treated as unable to pay its debts. On the facts, the notice was not sent to the registered office, but it was received by the company and a reply was sent. The defect was therefore treated as not warranting rejection of the petition at the threshold, since the company had actual notice of the claim.

Conclusion: Non-service at the registered office did not, by itself, invalidate the winding-up petition in the facts of the case.

Issue (ii): Whether, before directing advertisement of the winding-up petition and appointing a provisional liquidator, the Court had to afford the company an effective opportunity to show a bona fide dispute and the absence of a prima facie case.

Analysis: The winding-up procedure under the Companies (Court) Rules contemplates a summary enquiry at the admission stage, and the Court must be satisfied that the petitioning creditor has made out a prima facie case, that the debt is ascertained or substantially ascertained, that it is within limitation, and that the defence is not bona fide. Where the company asserts a bona fide dispute, security, counter-claims, or that the petition is being used as a means of debt recovery, the Court should not mechanically order advertisement without giving an effective opportunity to meet the prima facie case. Since the appellant had raised substantial disputes and the petition had serious consequences, the company ought to have been heard on merits before advertisement and appointment of a provisional liquidator.

Conclusion: The order directing advertisement of the petition and appointing the provisional liquidator could not be sustained.

Final Conclusion: The appeal succeeded, the impugned order was set aside, the publications were recalled, and the matter was remitted for fresh consideration after giving the company an opportunity to be heard.

Ratio Decidendi: In a winding-up petition, the Court must, before ordering advertisement or other coercive steps, conduct a summary enquiry sufficient to determine whether the petitioning creditor has made out a prima facie case and whether the debt is bona fide disputed; actual notice may cure a defect in the place of service, but it does not dispense with the need for such enquiry and hearing.

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